Home prices in Motown are nearly back to pre-crisis peak

Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage on bigger issues.

Has the housing market in one of the cities hit the hardest by the financial crisis finally recovered?

At this point, most observers are aware of the plight of Detroit in the wake of the crisis. The city’s economy and housing market both went in the tank as the crisis wore on.

Eventually, the city itself declared bankruptcy, marking the largest municipal bankruptcy in the history of the country.

In the years since the crisis, the city has been on the rebound, with government funds and private capital helping to lead the way. And now, it appears that the city’s housing market is on the precipice of a full recovery.

Last week, Amherst Capital released its latest market commentary, the Amherst Home Price Index, which showed that Detroit is now within mere decimal points of a total comeback.

“Based on the Amherst Home Price index, we find that Detroit is finally within 1% of its pre-crisis peak,” Amherst noted in its report. “This was on the back of a strong 7.2% year-over-year growth in April 2018 and we fully expect it to reach new record in the next couple of months. When that happens, 13 of the top 20 big cities will have surpassed their pre-crisis peaks.”

That’s right. Not only is Detroit right on the doorstep of a full recovery, Motown could soon surpass its pre-crisis peak in the next few months.

Detroit’s recovery tracks with what’s going on nationwide, with home prices continuing to rise across the board, although that increase has tracked below other asset classes.

From Amherst’s report:

U.S. housing market grew at a solid 5.3% Y-o-Y in April 2018 according to Amherst Home Price Index.

The pace of new single-family housing construction remains anemic by historical norms even as we expect greater demand from more millennials entering family formation ages in the coming years.

Amherst remains optimistic on the U.S. home price growth for the foreseeable future.

We expect National home prices to continue their solid growth, with an HPA forecast of 4.3% next year.

In other news, a Texas residential developer, who boasted his new luxury housing development,would allow people to survive a nuclear holocaust stands accused of agreeing to launder money for Columbian drug lords.

According to a federal criminal complaint obtained by CBS 11 News, Trident Lakes owner and manager John Eckerd faces two counts of money laundering and one count of conspiracy to commit money laundering.

The court documents allege Eckerd, 54, and an unidentified co-conspirator accepted $200,000 in purported drug money from undercover FBI agents over the past year. The federal sting culminated in February with Eckerd allegedly agreeing to launder $1 million from Colombian drug dealers through Trident Lakes, a planned 700-acre residential project in rural Fannin County.

The development made headlines a few years ago due to its supposed inclusion of hundreds of underground condos that would conceivably allow residents to survive a nuclear war or a zombie outbreak or whatever.

But it sounds like there has been much development at the Trident Lakes project so far.

Again from the CBS 11 report:

According to Trident’s website, the first residents were expected to move in earlier this year, but neighbors told the I-Team that they’ve seen no progress.

“None,” said Tommy Pinkston, who lives at a mobile home park across from Trident Lakes. “Everything that’s there was there when I moved out here.”

Also, in case you missed it on Friday, the battle over the leadership of the Consumer Financial Protection Bureau is nearly over.

Leandra English, former CFPB Director Richard Cordray’s handpicked choice to replace him when he stepped down in November, announced Friday via her attorney that she plans to resign from the bureau and give up her claim to the director’s office.

Just before Cordray resigned, he promoted English from chief of staff to deputy director, positioning her to take over as acting director upon his departure.

The Trump administration would have none of that and named Office of Budget and Management Director Mick Mulvaney the acting director of the bureau.

English took the Trump administration to court, claiming her right as the bureau’s rightful director.

Federal courts repeatedly sided with Trump and handed control of the bureau to Mulvaney.

English took her case to the U.S. Court of Appeals for the District of Columbia Circuit, which earlier this year, agreed to hear her case on an expedited basis.

As you might expect, progressive and left-leaning groups expressed their gratitude for English and her service at the CFPB, and used her departure as an opportunity to take shots at both Mulvaney and Kraninger.

“Mick Mulvaney and Kathy Kraninger could learn a thing or two from Leandra English’s unwavering commitment to the consumer protection mission of the CFPB and her courage to persist even when big banks, predatory lenders, and other powerful Wall Street special interests are doing everything they can to grind the important work of the Bureau to a halt,” Karl Frisch, executive director of Allied Progress, said in a statement.

Americans for Financial Reform echoed those sentiments.

“By taking on the acting director role, Leandra English courageously stood up for the independence of the Consumer Financial Protection Bureau at a particularly difficult and challenging time,” Linda Jun, senior policy counsel at Americans for Financial Reform, said.

“Now that the president has engaged in the process of nominating a director for Senate consideration, something he should have done long ago, the time is right to thank Ms. English for her service to consumers and to the law,” Jun continued. “The public interest community will focus on ensuring that the next director is a champion of consumers in the face of Wall Street and predatory lenders.”

Center for Responsible Lending Senior Legislative Counsel Yana Miles called English a “revered public servant” who prioritized consumer protection.

“Throughout her tenure at the CFPB, even before becoming Acting Director, she worked to significantly improve the lives of people across the country, especially in communities of color,” Miles said.

“With her help, the agency has been a vigilant enforcer of civil rights laws and combatant of discriminatory practices in the financial marketplace; English has helped enforce fair lending laws that protect consumers of color from being charged more for a mortgage, auto loan, or credit card,” Miles continued.

“We need a champion who will maintain the level of commitment to consumers that Ms. English and the previous director did. Mick Mulvaney, who has publicly maligned the CFPB and called for its elimination, is not that champion, and, to that end, neither is the current CFPB Director nominee,” Miles concluded. “CRL wishes Ms. English well and thanks her for her years of public service.”

As for groups from the other side of the political aisle, there was radio silence in regards to English stepping down. They were probably too busy celebrating.

And with that, have a great week everyone!

Ben Lane is the Editor for HousingWire. In this role, he helps set a leading pace for news coverage spanning the issues driving the U.S. housing economy and helps guide HousingWire's overall direction. Previously, he worked for TownSquareBuzz, a hyper-local news service. He is a graduate of University of North Texas.

Commentary

With the recent turnover in leadership at the Federal Housing Finance Agency, we may be standing at the precipice of great change in the government’s role in supporting the mortgage market through Fannie Mae and Freddie Mac.